People wearing face masks shop at a market, following new cases of the coronavirus disease (COVID-19) in the country, in Beijing, China January 11, 2021. REUTERS/Tingshu Wang/File photo
BEIJING -China’s consumer prices in September rose at the fastest pace since April 2020, driven largely by food costs, limiting the scope for more policy easing to prop up a faltering economy hit by COVID-19 restrictions and a property sector slump.
The consumer price index (CPI) rose 2.8 percent from a year earlier, quickening from a 2.5- percent increase in August, National Bureau of Statistics (NBS) data showed on Friday, in line with forecast in a Reuters poll of analysts.
Consumer inflation accelerated as food prices rose 8.8 percent on year from a 6.1 percent gain in August. Pork prices leapt 36 percent from 22.4 percent growth a month prior and vegetable prices jumped 12.1 percent from a 6- percent rise previously.
Underlying inflation remained much more modest, however, with core inflation — which excludes volatile food and energy prices — at 0.6 percent versus 0.8 percent in August.
On a month-on-month basis, the CPI grew 0.3 percent after a 0.1 percent fall in August, also supported by a rise in monthly pork price inflation.
The producer price index (PPI) grew at the slowest pace since January 2021, rising 0.9 percent year-on-year from 2.3 percent growth a month earlier, and compared with a forecast of 1 percent.
Analysts had expected producer inflation to pull back largely due to lower oil prices, with factory surveys suggesting companies were passing on some savings to customers in order to boost flagging sales.
The world’s second-largest economy barely grew in the June quarter and has struggled to regain traction amid protracted pandemic restrictions, a severe slump in the property market and softening exports.
As of Oct. 10, 36 cities which make up 13.9 percent of China’s population and 19.7 percent of GDP, were implementing various levels of lockdowns or some kind of district-based control measures, Nomura said in a research note.
With strict pandemic curbs likely to stay in place for some time, economists expect policymakers to roll out more monetary and fiscal easing to support the recovery, though they will be cautious amid worries over capital flight. Other major economies continue to aggressively raise interest rates and the yuan is already hovering around 14-year lows.
The International Monetary Fund on Tuesday cut its 2022 and 2023 economic growth forecasts for China to 3.2 percent and 4.4 percent, respectively, saying the frequent lockdowns under the country’s zero-COVID policy have taken a toll.